On April 4, as the jury settled down to shortlist this year's coolest start-ups from 103 entries, it took them less than five minutes to pick the first one - horizontal online marketplace ShopClues. The company figured in everybody's list. But a jury member had a question, nevertheless. "They are a marketplace and there are enough marketplaces ahead of them," he said, softly. "There is a Snapdeal ahead of them," he added but stopped just short of asking "so how is ShopClues different?"

In a split second, a fellow jury member jumped in. "ShopClues is very close to Taobao," he said. "They have large number of stock keeping units and unstructured categories. Their number of merchants would be much larger. The way market is getting sorted out is Taobao versus Tmall. Snapdeal would be more Tmall-ish."

Both Taobao and Tmall are Chinese companies, operated by the Alibaba Group. But while Taobao is a marketplace for small entrepreneurs - a sort of a consumer-to-consumer site - Tmall sells more branded goods.

We posed the same question to ShopClues founders Sanjay Sethi and Radhika Ghai Aggarwal. There is Flipkart who currently leads the horizontal marketplace with a 44 per cent share of the $6.3 billion Indian e-commerce market by gross merchandise volume (GMV), according to a report by Morgan Stanley. Then there is Snapdeal (32 per cent share) and Amazon (15 per cent share). These boys are big with deep pockets - Flipkart has raised $2.3 billion thus far, Snapdeal $1 billion in 2014 and Amazon has pledged $2 billion for India. ShopClues, in contrast, looks a teenager - $500 million in GMV and $130 million in the bank, raised from Tiger Global, Nexus Venture Partners, and Helion. Is there really a place for a fourth player?

"We have heard that question before," Aggarwal smiles, and snaps. "If there is anybody in the top four that's differentiated, it's us," she adds.

The company is not worried about the wall of cash others have created. The industry, it believes, will diverge and all companies would need to differentiate by niches. Else, they might end up looking like a man with a split personality - selling both luxury and mass market products would dilute a firm's brand. The battlelines have been drawn. ShopClues is clear it wants to be a mass market retailer.

So the company's coolness is in the categories it plays in, the customers and the merchants it targets. In India, offline retail is all about the bazaars - Sarojini Nagar, Janpath, and Lajpath Nagar in Delhi, for instance. "But what was happening online was a mall mentality - Flipkart was a mall. There was nobody who was representing the bazaars or bringing the actual traders of India online," Aggarwal says.

Her categories are, therefore, unstructured, which means they may not be branded. "That would mean home and kitchen, fashion. But fashion for us is local and regional brands - unbranded fashion. Even in categories like mobiles and tablets, we are about the smaller brands," she says. One of ShopClues' top selling brands is Josh Mobiles, a Delhi-based phonemaker, which started in 2010. Home and kitchen is the company's largest category, contributing upto 20 to 25 per cent of its GMV.

Now, because of smaller brands, ShopClues' customer profile is more mass market, coming largely from tier two and three cities. Seventy per cent of its business currently is generated in smaller cities. "We are focused on the Indian middle class, not the McKinsey middle class," Aggarwal says. The 'McKinsey middle' has annual household income of Rs 14 lakh and above; they drive a sedan. "For us, the household income is anywhere from Rs 3 lakh to Rs 10 lakh. It is a younger customer, out of college, on the first job, just married and setting up their first home," she says.

And like the jury member said, they have a large merchant base of 130,000 sellers. That is more than what the big three e-commerce boys have. Snapdeal, for instance, claims 100,000 sellers. "Ninety per cent of them are small and medium enterprises," Aggarwal says.

A couple of small sellers Business Today spoke to said they are making good money. Shveta Narula, for instance, currently sources dinner sets, cookware, candles and clocks from different markets in Delhi and sells it on ShopClues. She started out with Rs 8,000 and now, after two years, has an annual turnover of Rs 1.5 crore. Ninety per cent of her sales are generated in ShopClues. She also sells on Flipkart and Paytm. "I am now a top rated merchant on ShopClues," she tells this reporter on phone.

It has been a steady rise ever since the day the company went live on January 26, 2012. But planning the company began much earlier, in 2011. And it all started when Aggarwal met Sethi. His daughter Aanya and Aggarwal's son Ahaan went to the same school in Fremont, California, the Stratford School. "We got to know each other because our kids were in the same class. The idea and the business model was conceptualised in the Silicon Valley," Aggarwal says.

A third founder is Sandeep Aggarwal, Radhika's husband. He was a Wall Street analyst and had a good pulse on what was happening in India. Sethi's expertise was in marketplaces; he worked with eBay. Radhika Aggarwal worked with American fashion retailer Nordstrom. India, the team decided, was the right place for an e-commerce business. "The only place a marketplace could be done was India. In the Silicon Valley, there is dime a dozen marketplaces. So there wasn't much scope there," says Sethi.

The founders burnt the boat behind them. "We picked up our kids, families, put stuff in a container and shipped. All of us had very few years of experience working in India," Aggarwal recollects.

The risk the trio took has obviously paid off. The company now registers growth of 600 per cent year-on-year. ShopClues gets over 50 million visitors and does close to 1.5 million transactions a month. What was the secret sauce to success? The company's emphasis on the home and kitchen category obviously helped. It is not easy for branded sellers to sell cookware online - while kitchens across the US look more or less the same, India is not a homogeneous market. A kitchen in south India is very different from the north. That's a place ripe for the unstructured category.

Going ahead, it could be ShopClues' wholesale business that may prove a differentiator. ShopClues started its wholesale marketplace, a business-to-business venture, eight to nine months ago. While today it just contributes two to three per cent of the GMV, it is fast picking up. "Around 18 to 20 per cent of the retail buyers are also buying in wholesale format. They may be very small retailers," Sethi says. While the company does not stop retail customers from buying wholesale, there is a minimum order volume they need to place depending on the product. The company's wholesale marketplace caters to home and kitchen, fashion and automobile accessories categories. It also facilitates cross-border trade.

WHEN YOU PLAY IN THE UNSTRUCTURED CATEGORIES, YOU DON'T GET INTO PRICING BATTLES. YOU GET INTO PRICE POINT BATTLES. IT IS A BATTLE OF SELECTION. YOU CAN GET THE LARGEST RANGE OF SHIRTS, FROM Rs 50 TO Rs 500.

SANJAY SETHI

Founder, ShopClues

Sethi insists there is no secret formula to the company's success. Instead, it is about getting many things to work in unison. "India is a very fragmented supply-chain. It is primarily built around small businesses. Organised retail is not going to take hold in India. Given this, our belief was that if you create a platform, which is an e-commerce operating system, then you will be able to onboard a large number of merchants."

The idea was to augment the platform with services such as fulfilment, payments, logistics - nothing unique here considering all e-commerce companies do the same. However, ShopClues seems to be using capital more efficiently than others. "We are not into large warehouses, hiring thousands for last mile delivery. We are not managing inventory either. Our model is very technology oriented," Sethi adds. The company's platform is a self-service platform where merchants require minimal manual intervention or help. "That is how scale happened for us. We have 50 people that manages the base of 130,000 merchants," Sethi says.

The belief is its asset-lite philosophy will lead to profitability faster. And while it offers discounts like other e-commerce companies to gain traffic, it will probably burn much less cash because the unstructured market is more about selection. "When you play in the unstructured categories, you don't get into pricing battles. You get into price point battles. It is a battle of selection. You can get the largest range of shirts, from Rs 50 to Rs 500," says Sethi. The company aims to break even by the second half of 2016 - that would be faster than its top three rivals, who today collectively burn more than $100 million in cash every month.

While ShopClues scores high on the coolness quotient right now, there is one lingering question. All the biggies have their eyes on the small. "The future of online marketplaces will be the future of SMEs in India," says Ankit Nagori, Senior Vice President at Flipkart. They are all courting the Narulas, rushing to tie up with artisans, and jostling each other to strike deals with kiranas. What if they all pivot to become largely unstructured category players? The answer may well determine if the cool ShopClues will remain hot property in the future.